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Affordable Spanish mortgages to continue for two more years at least

Affordable Spanish mortgages to continue for two more years at least

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Fixed rate mortgages in Spain are currently very affordable, and are likely to stay that way for at least two years.The low interest rates that are currently shaping the Spanish mortgage sector are set to continue for at least two more years as the uncertainty over the future of the Eurozone continues, experts have said…

 Low mortgage rates in Spain have been one of the driving reasons for the surging recovery of the property market over the past 24 months, and the country is going to stick with the fixed rate mortgage levels offered by the Euro Interbank Offered Rate, also known as the Euribor.

The Euribor is something of a safety valve for Europe’s property sectors, setting an average rate of interest payments across most of the Eurozone based on how the economies are performing. The European Central Bank, spooked by recent financial blips across Europe, is expected to continue to hold the Euribor rate below zero until at least 2019.Most Spanish mortgages are pegged to the Euribor, which in September dipped to -0.057% – the eighth-straight month of negative rates. Normally, such sustained low interest rates would only be deemed viable for short periods at a time, and are generally introduced to help stimulate national markets.But just like how Germany’s export-based economy benefited for years from the low euro, Spain’s property market is now set to reap the gains of low interest rates as standard across Europe. Spain’s property market is one of the more dynamic in the Eurozone, and certainly the most popular among foreign – chiefly British – buyers, who are being offered favourable terms when purchasing a home in Spain.With the Euribor even expected to plunge to perhaps -1 per cent in 2018, monthly repayments on mortgages could become even lower, which in turn will only turn heads towards the Spanish property market.Spain’s banks, on the other hand, have to be wary. While adding more mortgage customers will be welcomed, to do so at continued low interest rates could have a long-term impact on their own profitability, causing them to tighten lending in a few years’ time.However, having been through the mill with the Spanish real estate sector in recent years, most sensible banks will be keeping a close eye on the near future to ensure the market does not overheat but, instead, grows sensibly and solidly – as it has been doing since the beginning of 2014.

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